SectionTitle: Appendix C: Glossary
ACADEMIC YEAR -- This is a measure of the academic work to be
accomplished by the student. The school defines its own academic
year, but the federal regulations set minimum standards for the
purpose of determining SFA awards. For instance, the academic
year at a term school must be at least 30 weeks of instructional time
in which a full-time student is expected to complete at least 24
semester or trimester hours, 36 quarter hours, or 900 clock hours.
AWARD YEAR -- The award year begins on July 1st of one year,
and extends to June 30 of the next year. Funding for the Federal
Pell Grant and campus-based programs is provided on the basis of
the award year -- thus, a student is paid out of funds designated for a
particular award year, such as the 1994-95 award year.
BASE YEAR -- For need analysis purposes, the base year is the
calendar year preceding the award year. For instance, 1993 is the
base year used for the 1994-95 award year. The "Free Application
for Federal Student Aid" uses family income from the base year
because it is more accurate and easier to verify.
CAMPUS-BASED PROGRAMS -- The Federal Perkins Loan, the
Federal Supplemental Educational Opportunity Grant, and the
Federal Work-Study programs. These three programs are called
"campus-based" because the funds are administered directly by the
school's financial aid office, which awards these funds to students
using federal guidelines.
CENTRAL PROCESSING SYSTEM (CPS) -- The Department's
processing facility for application data, currently located in Iowa.
The CPS receives student information from the application
processors, calculates the student's official EFC, and returns the
student's information to the application processor, which prints the
Student Aid Report.
COST OF ATTENDANCE (ALSO KNOWN AS COST OF
EDUCATION) -- The student's cost of attendance includes not only
tuition and fees, but the student's living expenses while attending
school. The cost of attendance is estimated by the school, within
guidelines established by federal regulation. The cost of attendance
is compared to the student's Expected Family Contribution to
determine the student's need for aid.
DEPARTMENT (OR ED) -- Abbreviation for the U.S. Department
DEFAULT -- Failure to repay a loan in accordance with the terms of
the promissory note.
DEFAULT RATE -- A percentage calculated each year for a
postsecondary school, based on the number of former students who
have defaulted on a Federal Stafford Loan received at that school.
EXPECTED FAMILY CONTRIBUTION (EFC) -- The amount the
student's family is expected to contribute towards the cost of
attendance, for the purposes of the SFA programs. The EFC is
printed on the front of the Student Aid Report.
FEDERAL FAMILY EDUCATION LOAN PROGRAMS -- The
Federal Stafford, and Federal PLUS loan programs. Funds for these
two programs are provided by private lenders, and the loans are
guaranteed by the federal government.
FINANCIAL NEED -- The difference between the student's cost of
attendance and the expected family contribution.
FREE APPLICATION FOR FEDERAL STUDENT AID (FAFSA) -
- The application filled out by the student that collects household
and financial information to be used to calculate the Expected
NEED ANALYSIS -- The process of analyzing the household and
financial information on the student's financial aid application and
calculating an Expected Family Contribution.
OVERAWARD -- Generally, any amount of campus-based aid or a
Federal Family Education Loan that exceeds the student's financial
need. (The overaward concept does not apply to the Federal Pell
OVERPAYMENT -- Any payment of a Federal Pell Grant, Federal
SEOG, or SSIG that exceeds the amount for which the student was
eligible, whether the overpayment is the result of an overaward, an
error in the cost of attendance or the Expected Family Contribution,
or any other eligibility criterion, such as citizenship or enrollment in
an eligible program.
PROMISSORY NOTE -- A legal document that the borrower signs
to get a loan. By signing this note, the borrower promises to repay
the loan, with interest, in specified installments. The promissory
note will also include any information about the grace period,
deferment or cancellation provisions, and the student's rights and
responsibilities with respect to that loan.
RESOURCES -- Other student aid that must be taken into account
to prevent an overaward in the campus-based programs, as defined
in the regulations for the campus-based programs. (The term
"resources" is used differently in the independent student definition,
where it includes taxed and untaxed income and other forms of non-
parental support, as well as student aid.)
SCHOOL -- A postsecondary educational institution. In this
Handbook the term "school" refers to such an institution.
SIMPLIFIED NEEDS TEST -- The primary purpose of the
simplified needs test is to make it easier for students from low-
income households to fill out the "Free Application for Federal
Student Aid." If a student's family's taxed income or earned income
is $49,999 or less, and the relevant family members were non-tax
filers or used a 1040A or a 1040EZ to file their taxes, the student
will fill out only the first part of the application. Students who use
the simplified needs test generally receive a larger award.
STUDENT AID REPORT (SAR) -- An output document sent to the
student by the application processor. The SAR contains the
financial and other information reported by the student on the "Free
Application for Federal Student Aid." That information is entered
into the processing system, and the SAR is produced. The student's
eligibility for aid is indicated by the EFC printed on the front of the
SFA PROGRAMS -- The programs administered by the office of
Student Financial Assistance Programs within the U.S. Department
of Education: Federal Pell Grants, Federal Supplemental
Educational Opportunity Grants, Federal Work-Study, Federal
Perkins Loans, Federal Stafford Loans, Federal PLUS Loans, State
Student Incentive Grants, Byrd and Douglas Scholarships.
VERIFICATION -- A procedure whereby the school checks the
information the student reported on the financial aid application,
usually by requesting a copy of the tax returns filed by the student
and, if applicable, the student's spouse and parent(s). Many schools
conduct their own form of verification. In addition, schools must
verify students selected through the federal central processing
system, following the procedures established by regulation. The
contractor will print an asterisk next to the Expected Family
Contribution (on the Student Aid Report) to identify students who
have been selected for verification.